Gold-Plated Teachers' Pensions
The attack against teachers' unions continues unabated. The latest targets the alleged lavish pensions that teachers receive as a result of the deal brokered with legislators ("It Was a Great Year for America's Pensions, but Many Are Still in Crisis," The Wall Street Journal, Aug. 9). But a closer look reveals that whatever funding shortfalls in the budgets of states exist have nothing at all to do with the unions but instead with broken promises. I'll confine my remarks to teachers' pensions.
Teachers' pensions use a combination of investment income and contributions from teachers, states and cities to fund the promised benefits. Critics claim that teachers are getting "gold-plated" pensions that are responsible for bankrupting the system. But in California, the average retired teacher who left the field at age 62 after teaching 25 years received a monthly pension of about $3,980. (Teachers do not receive Social Security unless they have worked elsewhere to amass the required pay-in to qualify.)
In 2000, teachers in California who taught at least 25 years would have their pensions based on their highest single year of salary, rather than on an average of the top three. They also would receive longevity bonuses if they passed the 30-year employment threshold.
But as in so many other states, lawmakers cut their contribution, failing to uphold their end of the bargain. When the stock market deflated in 2001, earnings fell, creating a significant shortfall. The picture is a bit brighter now because of the strength of the stock market. Yet the shortfall remains.
What I always have to wonder when I read the angry comments accusing teachers of having it so good is why these same people don't become teachers? After all, if salaries are so generous, working hours are so short and pensions are so generous, then get on the gravy train and become a teacher. Of course, they won't.